This week on the forums, poster ASmith84 posed the community a question: "Why Death Penalty?"
"Why do people want a death penalty?" He started the discussion, "What is so great about losing XP? It just makes you play the game longer which makes you pay more. Why do people like this?"
Poster Ghostleader replies, "I don't know about most people but I like death penalties because of the feeling that if I lose I'll actually lose which makes me play better and actually gives me a bit of a rush when PvP as opposed to other games where I lose nothing so there's no reason for me to feel like I need to stay alive."
I don't know about most people, either, but I definitely agree with Ghostleader. When I play games with no or light death penalties, I simply stop trying to stay alive. My first MMO was Lineage, the original Lineage, and death meant losing 10% of your level's XP, and possibly losing some of your gear. Even small penalties like stat reductions or returning to a bind point aren't too big of a deal to me, and I stopped counting how many "kamikaze" runs I've made in EverQuest, where you can summon your corpse and, after receiving a resurrection, the EXP loss is only about 0.4% of your level!
I know most gamers aren't as hardcore (or masochistic?) as I am, but the majority of posters agreed that a death penalty, in some form, is important to keep the game fun. Poster Joliust points out that without death there's no thrill in avoiding it: "It's the thrill you get when you get close to death and you just barely make it out alive."
Shezomb provides an example of what happens without a death penalty, or with a very negligible death penalty. "Back in the old beta days of Ryzom there was no death penalty, to make testing more smooth and easy. The good thing about it was you suddenly had a free and easy way to transport." Without a death penalty, players start figuring out how to use death for transport, for scouting, etc.
Vingvega provides the first qualifier for a death penalty: "Death penalty is OK as long as it doesn't make you de-level." Well, there goes Lineage! He continues, "EverQuest II is pretty good with death penalty."
Bleyzwun has a similar standpoint: "Losing exp is no fun...neither is losing all your gear you busted your ass to get. Though I don't mind losing exp as long as it's not a [crazy] amount. Losing gear? I can't get down with that. Any other death penalty is fine, though I dunno what else they can do."
There are a multitude of other death penalties, most of them less harsh than XP or gear penalties. For example, death in Guild Wars lowers your Morale, giving you a stat decrease that you have to work off by killing MOBs. Death in Lord of the Rings Online gives you a similar Morale hit, but this penalty is on a timer. Death in EverQuest respawns you without any of your gear, and you have to retrieve your corpse to re-loot your items; Vanguard has a similar system, but you can bind items to you and they won't stay on your corpse.
And then there is the developer side, as poster Retrospectic points out, the very obvious reason for developers to like death penalties is stated in the original post: "It... makes you play the game longer which makes you pay more." It's another hurdle on the way to endgame content; simultaneously slows the player down and challenges them to come back and try again.
Gpett, another poster, starts his post off by admitting he hasn't read the whole thread; and yet he sums it all up rather eloquently. "Why does fire burn? Why does injury hurt? To teach you a lesson. To evolve. To become better than you currently are."